What is a MERCHANT ACCOUNT? and other merchant account related answers. Credit Card Processing New Jersey

Merchant Account FAQ

What is a merchant account?

A common misunderstanding is that a merchant account is a type of bank account, it is not. A merchant account allows merchants to accept credits cards and incorporate other cash processing methods, such as check cashing into their income flow. It is similar to a credit line from a bank. Merchant accounts are issued by what are called, “Acquiring banks”. A merchant must have an ongoing, contractual relationship with either an acquiring bank or an agent of an acquiring bank (also called ISO / MSP) in order to processing credit cards.

How do I apply for a merchant account?

Applying for a merchant account is simple.

  • Use our web site application form. This will help us get your information to the right customer service agent.
  • A Customer service agent will contact you within one business day.
  • Your agent will address any issues or question you may have and assist you in understanding how our services work and how our rates and fees are calculated
  • You will be asked to fill out and sign a merchant application and fee schedule
  • Fax over signed documents. You will also be asked to fax a pre-printed voided check
  • Approval can be successful within 24-48 hours

What is Interchange Pass Through?

Interchange Pass Through refers to a specific type of pricing applied to a merchant account. It is based on Interchange rates. Interchange is the wholesale rate that banks charge each other to process credit cards. A merchant’s goal is to pay as close to the interchange price as possible.
Read More On Interchange Pass Through…

What is 3 Tier Pricing?

3 Tier Pricing is the name given to the pricing plan that many ISO’s and processors use to create their rates schedules. The 3 levels are referred to as Qualified, Mid-Qualified, Non-Qualified. This structure is unnecessarily confusing and very costly. At 1st Advantage Merchant Service New Jersey, we use our own “Unique Pass Through” pricing structure.

What is an acquiring bank?

An acquiring bank has the authority to process credit cards by contacting the issuing banks (issue banks are financial institutions that issue credit cards to consumers). Acquiring banks have the ability to obtain consumer purchase approval in real-time, and collect on behalf of the merchant.

What is an ISO/MSP?

It is an abbreviation for Independent Sales Organization/ Member Service Provider. An outside company (not MasterCard or VISA) which is registered and contracted by the bank card associations to administer merchant services.

What determines whether a merchant can go directly to a acquiring bank or an ISO?

Acquiring Banks typically require a merchant to process a high volume of transactions and sign into a quota contract. However with an ISO the merchant has the flexibility to negotiate every level of his merchant account which ultimately results in savings. Dealing with an ISO will always benefit the small-mid size businesses.

How are fees and rates determined?

Rates and fees that are charge for the actual processing of a payment are called Interchange Surcharges. are fixed rates set by the card association, varying by merchant industry. Acquirer fees are an additional markup added to association fees by the acquiring bank, varying at the acquirer’s discretion.

Why are there different rates for different accounts?

The rates for merchant account can vary from industry, risk and program associated with the transaction. A merchant account with the lowest rate will always be where the customer is present and the merchant physically receives a signed receipt. The credit card companies view this type of transaction low in risk, whereas internet or phone order transactions are considered higher risk since the customer is not present and the card is not in hand.

How long does it take to receive our funds once a payment is processed?

Funds are deposited directly into your checking account, within 24 – 48hrs.